CRL fights fed-level consent order for mortgage servicers
The Center for Responsible Lending and dozens of other consumer agencies asked federal regulators to forgo any proposed consent orders intended for mortgage servicers. The consumer advocacy group says a national solution in this case, may be misguided.
Instead, the CRL and partnering agencies contend that regulators should "withdraw the proposed consent orders issued to the nation's mortgage servicers to work with the state Attorneys General and U.S. Department of Justice to obtain a joint settlement that will address illegal servicing practices." The CRL indicated in its letter that home ownership and consumer advocates would prefer settlements and solutions that employ state solutions as opposed to the federal government unilaterally crafting solutions with servicers.
CRL in its letter addressed to the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the Office of Thrift Supervision said the draft consent orders do not hold mortgage servicers accountable for illegal practices and do nothing to end the cycle of foreclosures.
The CRL also criticizes regulators, saying the government agencies are going back to a model where they rely on federal regulators to stamp out problem areas when in fact state agencies may be better suited for this work.
"Certain federal regulators of this nation’s financial institutions have allowed servicers to flout the laws under which they operate as well as the mortgage contracts with homeowners, government agencies, and investors," CRL wrote.
"For example, during the years leading up to the current foreclosure crisis, the OCC aggressively tried to block state enforcement actions that could have dealt effectively with many of the industry practices that are wreaking havoc upon the American public today. These consent orders continue that pattern of attempting to block effective action at the state level, while permitting abusive practices by federally-regulated institutions to continue unchecked."
Rep. Elijah Cummings (D-Md.) also sent a letter to John Walsh, acting comptroller at the OCC, asking him to postpone a consent agreement with mortgage servicers and instead focus on greater transparency from the OCC about the agreement.
Cummings office said Wednesday the OCC responded to Cummings' request last night and agreed to brief him on the consent order. The OCC consent order is being released today.
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